Tax implications for Landlords

Any property owners / landlords in receipt of rental income from residential or commercial property are obliged to submit tax returns annually.

Any property owners / landlords in receipt of rental income from residential or commercial property are obliged to submit tax returns annually, whether the property is profit making or not. The most common type of rental income is from letting a house, flat, apartment, office, building, land, a holiday home or Section 23 or other tax relief properties.

When calculating your rental expenses, you can deduct expenses so long as they are incurred wholly and exclusively for the purpose of the rental property. Rental expenses can significantly reduce one’s rental profit.

The following expenses may be deducted from the gross rents receivable:

  • Repairs, insurance, maintenance, service charges, advertising for tenants, tax consultant fees and management of the property.
  • Interest accruing on money borrowed to purchase, improve or replace the property. From 7 April 2009 this is subject to 75%.
  • Goods provided and services rendered in connection with the letting of the property, i.e. anything that you purchase for the property can be offset against your rental income.
  • Only expenses after the date of first letting are allowable, with the exception of the costs of negotiating the first letting – such as auctioneer’s, marketing, and solicitor’s cost.
  • Capital allowances at a rate of 12.5% annually can be claimed on costs incurred on items that are not revenue in nature, i.e. that have a long term value, these costs will be written off over an 8 year period.
  • Losses can be carried forward and offset against future rental profit or increase your rental loss in the following year.
  • PRTB – this expenditure can be offset against your rental income.

First time landlord

If you are a First Time Landlord there are a few key steps that you need to be aware of:

  • If the property was previously your Principal Private Residence and you are still receiving mortgage interest relief on the loan, you will need to inform the TRS section by completing Form TRS4 and your TRS will be cancelled.
  • Register all residential properties with the Private Residential Tenancies Board ‘PRTB’. Failure to register with the PRTB not only prevents you from claiming your mortgage interest as a deductible expense and the PRTB also has its own fines for failing to register.
  • Register as a landlord with Revenue by completing a Form TR1.
  • Preferably set up a separate bank account for rental income & expenditure.
  • Keep and record all receipts for expenditure incurred, which relates to the property.
  • Submit your tax return annually. Late submission can also lead to interest and penalties.
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